Horserace Betting and Olympic Lottery Bill

HL Deb 02 March 2004 vol 658 cc552-89

3.12 p.m.

Lord Davies of Oldham

My Lords, on behalf of my noble friend Lord McIntosh of Haringey, I beg to move that this Bill be now read a second time.

The Bill has two main purposes. First, it addresses the Government's remaining involvement in the financing and administration of horseracing. Specifically, it allows for the sale of the Horserace Totalisator Board and the abolition of the Horserace Betting Levy Board. Secondly, if London is chosen to host the 2012 Olympic and Paralympic Games, the Bill allows dedicated lottery games to be established as part of the National Lottery. The proceeds from these will be used to meet expenditure in connection with the staging of the 2012 Olympic and Paralympic Games.

I am glad that so many noble Lords with experience and expertise in these areas will speak today. In particular, the noble Lord, Lord Moynihan, no doubt will contribute on the horserace aspects of the Bill. However, we particularly look forward to his contribution on the Olympic bid and the necessary financial support for that.

Turning to the detail of the Bill, Part 1 concerns the sale and dissolution of the Horserace Totalisator Board, the Tote. It provides for the vesting of the Tote's assets in a successor company wholly owned by the Crown and then the subsequent sale of that company. It also makes provision for the Secretary of State to require the Gaming Board to issue a seven-year licence to conduct pool betting on horse races. In the event that a seven-year licence is not issued or once the licence period comes to an end, the Bill provides for the future regulation of horserace pool betting by the Gaming Board. If during the licence period Parliament approves our plans to reform the general law on gambling, it will be for the new gambling commission to take over the job of regulation.

The Bill before the House today will therefore enable the Government to deliver our commitment to sell the Tote to a racing trust and to do so in a way which is fair both to racing and to the taxpayer. In the course of my research I found out where the word -Tote" originated. Apparently "totalisator" is an Australian word for a complicated calculating machine which enabled pool betting to be developed. For that discovery I was grateful. I hope the House is too.

The Tote was established in 1928 with an exclusive right to operate, or authorise others to operate, pool betting on horseracing in Great Britain. It was set up to provide an alternative to fixed-odds betting and to benefit horseracing. The Tote's profits over and above those required for reinvestment remain within racing, primarily through its contribution to the Horserace Betting Levy Board, payments to racecourses and its sponsorship programme. However, the Tote's present status as a public body is no longer appropriate or necessary. It is now an organisation with commercial ambitions that are likely to be inhibited by the financial constraints and accountability of the public sector.

In March 1999 a review recommended that the whole of the Tote business should be sold as a single entity. The Government agreed and in March 2000 announced its intention to sell the Tote to a consortium representing British horseracing interests. As many of your Lordships will be aware from debates in another place, the Bill is drafted to give the Secretary of State discretion over to whom the Tote is sold. As we have stated on numerous occasions—I am happy to repeat it today—we intend to sell the Tote to a racing trust. However, we do not wish to specify details of the purchaser on the face of this Bill only to waste valuable parliamentary time bringing the issue back to Parliament if, for some unforeseen reasons, we are obliged to sell it in a different way.

On the issue of the Tote's exclusive licence post-sale, we firmly believe it is in the public interest to open up the pool betting market to effective competition in the long term. We also believe a reasonable period of preparation is necessary to ensure that racing continues to receive a reliable income stream from the Tote after its sale. Opening up the market benefits the public in terms of consumer choice and protection and benefits the betting market by safeguarding a competitive pool. That is why we announced on 27 November 2003 that, if we succeed with our plans to sell the Tote to a racing trust, we will issue the Tote's successor with an exclusive licence to operate pool betting on British racing for seven years. The seven-year figure now appears on the face of the Bill. This will give complete certainty to the racing industry, to the Tote and to Members of both Houses.

This licence will not be extended and at the end of the seven-year transitional period, there will be a new regulatory regime that will also allow other bookmakers to provide pool betting. This regulatory regime is modelled on that which regulates the existing operation of pool betting on greyhound tracks, contained in Schedule 5 to the Betting, Gaming and Lotteries Act 1963.

The Bill seeks to strike the right balance between providing a sensible level of certainty for racing and introducing a welcome element of competition into the pool betting market. I hope that noble Lords agree that it is the best way forward for racing, the betting industry and punters.

I turn now to the abolition of the Levy Board. Part 2 of the Bill makes provision for the abolition of the horserace betting levy system, which includes the Levy Board and its associated levy appeals tribunals. It provides for the transfer of the Levy Board's assets and for the Gaming Board to take over from the Levy Board the function of approving racecourses.

The Government undertook two consultation exercises in March and November 2000 to consider whether a statutory system for the funding of horseracing was necessary. While the levy has served a very useful purpose in the past 40 years, it is no longer appropriate to have a statutory scheme of that kind. It should not be for the Government or another body to dictate how much bookmakers should pay racing for the use of its product.

The Bill will enable the Government to withdraw from their statutory involvement in the administration and financing of horseracing. We have taken steps to safeguard the important work that the Levy Board does to support veterinary research and the improvement of breeds of horses. We have always made it clear that the important work done by the Levy Board will not be neglected when it is abolished. We seek to ensure that these are maintained to at least current levels after the abolition of the Levy Board.

We accept that the OFT inquiry has cast a shadow over commercial agreements based on the sale of racing data and media rights between the racing and betting industries. That is why we have announced that we will retain the Levy Board until September 2006. By that time, the final results of the OFT inquiry will be known, any outstanding legal action should have been resolved and, if necessary, new commercial agreements should be in place.

The other main area of the Bill is the Olympic lottery. Part 3 enables dedicated Olympic lottery games to be established as part of the national lottery in the event that London—of course, we all hope that it will be so—is chosen to host the 2012 Olympic and Paralympic Games. It also creates the necessary structures for holding the proceeds from these lottery games and a distribution mechanism that will enable the proceeds to be used to meet expenditure in connection with the staging of the 2012 Olympics.

Only the wide-ranging benefits, the wholly exceptional scale and the one-off nature of staging the Olympics justify a separate funding scheme from the normal sports lottery. Staging the Olympic and Paralympic Games would lead to significant benefits extending across the United Kingdom. The Olympics has the potential to leave a lasting legacy of community facilities across the country, to inspire greater participation in sport and to increase the medal success of our elite athletes.

Sport and the benefits of sport are not the only reasons for bidding. A London Olympics would also have a positive impact on investment, tourism and regeneration, leaving a lasting positive economic and cultural legacy for the whole of the United Kingdom. The establishment of new Olympic lottery games will be the first time that the national lottery has been dedicated to a specific cause in this way. People will be able to buy a ticket and know that revenues will go straight to the costs of staging the 2012 United Kingdom Olympic and Paralympic Games.

Some people will choose to play Olympic lottery games instead of the existing national lottery games. However, Olympic lottery games, as part of a wider strategy for growth, have the potential to invigorate interest in the lottery in general and therefore benefit all the existing good causes. It is envisaged that new Olympic lottery games, as provided for in the Bill, would generate an estimated £750 million towards an overall £2.375 billion public package for the games. That total includes a substantial contingency.

In addition to the £750 million from new Olympic lottery games, £340 million will be sought from the existing sports lottery distributors. How that is spent will be a matter of discussion with those bodies. Should it be required, up to a further £410 million could be met by changing the percentage shares going to the existing good causes after 2009. The balance of the £2.375 billion funding package will be met by money raised through a London council tax and, if required, funding from the London Development Agency. It is right that as a leading beneficiary, London should bear its share of the costs.

Broadly speaking, the intention is that lottery funding should be directed to sports investment, Olympic facilities and events staging. Money raised from the Olympic council tax should address the capital requirements of the games, including transport infrastructure. The Bill will establish an Olympic lottery distributor to make grants and loans in connection with staging the 2012 Olympic and Paralympic Games if London's bid is successful. The new distributor would be lean and focused with minimal bureaucracy and a small and expert board. A separate distributor is essential to ensure that effective and informed decisions are taken on Olympic expenditure.

Everyone working on the bid believes that we have a very strong chance of success. London 2012 will be working to ensure that an extremely high standard bid meets all the criteria. So far it has done an excellent job. We are grateful for the efforts made. I should also like to take this opportunity to thank noble Lords for the immense support that the bid has received in this House so far. That support is vital to giving us the very best chance of winning and making the Games a resounding success.

I look forward to the debate. When I wind up, I shall do my best to respond to the points made. In summary, as a result of the changes we are bringing forward in the Bill, the Government will no longer have direct involvement in the administration and financing of horseracing. Instead, racing will take responsibility for its own affairs and financing. In addition, if, as we all hope, London is successful in its bid to be selected host city for the 2012 Olympic and Paralympic Games, the Bill makes provision for Olympic lottery games to be established. They will make a significant contribution towards the staging costs of the Games.

This Bill is a further demonstration of the Government's commitment to do everything possible to bring the Olympic Games to London. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Davies of Oldham.)

3.28 p.m.

Lord Wakeham

My Lords, first, I thank the Minister for setting out the objectives of the Bill with such clarity for the benefit of us all. We appreciate that. Secondly, I should declare my various interests, which, as far as I am concerned, look rather like a history book. I used to be a director of the Tote. For a number of years, I was chairman of the British Horseracing Board. For more than 30 years, from time to time I have been a modest owner of racehorses and a great lover of racing. But I very rarely bet.

I shall confine my remarks to the proposals for the Tote. I welcome the Bill, which, in effect, will nationalise the Tote prior to it being sold, we hope, to the Racing Trust. It is a technique that is not unknown. If I am right, it is the technique used when we were in government to deal with the problems of the Trustee Savings Bank; at the time, it was not absolutely clear who owned it.

When I was chairman of the British Horseracing Board, a key objective was that the Tote should continue to be run for the benefit of racing. We would have preferred being given the opportunity to acquire the Tote, but in my view the Government's proposals go firmly in the right direction and they have my support.

I have every confidence in the management of the Tote under the chairmanship of my old friend Peter Jones. He and his team are doing an excellent job in a very competitive world. I am delighted that my noble friend Lord Carlisle of Bucklow is sitting in his place today. But for him we probably would not have a Tote to transfer to the benefit of racing. It was his initiative in the early 1970s which led to the introduction of a Bill to allow the Tote to engage in wider pool betting than just on course, which was an absolutely vital part of the finances of the Tote. It would have been a disaster without it. I hope that my noble friend can reflect on 30 years of a job well done.

Lord Carlisle of Bucklow

My Lords, I say to my noble friend that the Bill belonged to the Home Secretary although I had the responsibility of taking it through Parliament. We had to pass it because at that stage the Tote was in financial difficulties. I hope that nothing in this Bill is going to damage the financial future of the Tote as an important part of the racing scene.

Lord Wakeham

My Lords, I believe that we can all share those sentiments. I also believe that the Government are right in the way in which they have set up the shadow Racing Trust. I have every confidence in the noble Lord, Lord Lipsey, and in my noble friend Lady Noakes, who will be key members of the trust in getting the process through correctly.

Having said that, I hope that the Racing Trust and the Tote will continue to be a force for good in what I call the minefield of internal racing politics. Racing is made up overwhelmingly of decent, likeable people, full of knowledge and experience of their sport. They realise that it is a very big industry with over 100,000 people employed in it. Six million racegoers attend race meetings every year at 59 different racecourses. It is a substantial industry and much bigger than a good many others. It has a massive amount of uncertainty. As I hinted, I fear that it gets itself into scrapes from time to time which it could have avoided.

There are one or two further uncertainties in this Bill. There is the uncertainty about the seven years' exclusive licence and the price which the Government will demand for the Tote, which in the eyes of many will be too little and in the eyes of others will be too much, and the associated problems if for some reason the Government feel compelled to sell to someone other than the Racing Trust.

Seven years for the exclusive licence seems to me to be about right. I do not underestimate the struggle that must have taken place within the Government to get agreement. But after seven years we cannot wash our hands of any issues which may remain. I do not expect the Government to say anything about that at this stage, but I hope that they will give it some thought, even if on a contingency basis.

There is also the price. I suspect that the Government will find that there will be higher bids on the table than the Racing Trust is able to pay. If, quite rightly, they want to sell to the Racing Trust, the Government may find themselves in legal battles which they would prefer to avoid. Therefore, the Government may find it in their own best interests to have a clause in the Bill which compels them to return to Parliament in the event that they are under great pressure to sell to someone other than the Racing Trust. I hope they will think about that.

The whole climate of this Bill and the exercise may be overshadowed by the OFT challenge and the implications of the winding up of the levy, which is currently concerning many people in racing. However, I do not believe that these problems are insoluble. This is not the time or place to rehearse comprehensive solutions although they exist. I believe that the racing industry increasingly recognises that private negotiations are more likely to yield results than high profile public debates which merely harden attitudes. I wish the Bill well.

3.34 p.m.

Lord Addington

My Lords. I shall make most of my comments about the second part of the Bill relating to the proposed Olympic lottery. We approve of the aims of both parts of the Bill. My noble friend Lord Falkland will speak with considerably more knowledge than I have about the second part of the Bill. We approve of the sale of the Tote to a trust for the benefit of racing.

My main home is now just outside Lambourn and at the top of the valley of the race horse. It is an area which I knew initially through my wife. In earlier days we used to walk around the area. I was struck by the number of horses wandering around with people of a stature rather different from mine sitting on them. My wife is rather a good horsewoman. She would say to me, "That horse will do for you". She would point to a field in which there would be a huge animal looking like a horse but, I suspect, related to a brontosaurus, either knocking over a tree or eating a hedge. She would say, "You could learn to ride on one of those". I would describe my reaction to the suggestion as being short, negative and in the vernacular. That is about as much as I know and am ever likely to know about racing.

It is time that we glanced at the history of the lottery which is used for supporting fun. I looked up the initial actions taken as regards the lottery. Having a lottery or part of a lottery that will presumably be sold to the entire nation and not just to London—perhaps the noble Lord will confirm that point when he comes to reply—is probably a step forward.

I looked up the initial debate in this House which took place just under 12 years ago. The noble Lord, Lord Richard, was in his place a moment ago. I believe that he took part in that debate. We heard that there were four good causes. I remember that initially there were supposed to be three and charities were put on the edge. We have sliced into a large cake vigorously over the years.

I believe that on our Benches support was given initially because there was supposed to be additional funding to government money. That has fallen by the wayside with greater rapidity than anyone ever suspected. When there is a good cause reference is made to the national lottery, which has been described as a voluntary tax on the gullible, and the suggestion is then made that a slice should be taken from it.

With that in mind, I hope that the Government will make sure that they have their eye on the main task and ensure that the Olympic lottery takes place if we win the bid. It would not be necessary if sport had more of the money which the lottery was designed to raise. We shall have to create good stadiums for people to train throughout the country. If we had invested more in sport and ensured that funding was available for the groups it was designed for initially, we probably would not need to ask everyone for so much money. The main criticism will be about the other good causes which have been tagged onto the back of lottery funding. To criticise them is a little like asking whether one is against research for finding a cure for cancer. Who could possibly be against that?

Initially, we had additional funding and not something which substituted government funding for universities and medical facilities. I hope that the Government will ensure that the idea of a legacy is worked well into the structure and planning of the funding. They should ensure that that legacy is directed to the Olympics and beyond, as mentioned in the government literature, so that we do not have the ridiculous situation of further slicing of the cake, and so that we ensure that we can go on.

On sports medicine, if we are to get our nation active again we should recognise that repairing an elite-level hockey player's knee after a fall, for example, is the same as treating someone injured while kicking a football about on a Sunday. Non-elite athletes may not heal so quickly but the structure and mechanics involved are the same. Can the Government assure us that those projects will be set in place and that they will fit into what already exists? That is what I am calling for.

I could discuss in great detail many other aspects of the problem that we are inheriting because of what has not been done or what has been moved away from. I shall leave noble Lords with this thought: unless we get absolutely right the sporting structures and cash in on the cultural good will that will remain, the idea of a legacy will be greatly reduced. Can the Government assure me that they plan to bring the new funding into line with the previous system and to merge them together? Can they further assure me that there will not be chipping away at the edges if we get slightly too much money, for instance, and that it will go towards the whole sporting infrastructure? If the Government can guarantee that, they may repair some of the damage caused by their simply saying, "We do not want to up taxes, let us take another slice of the lottery".

3.41 p.m.

Lord Judd

My Lords, at the outset I am sure that all noble Lords would like to say how exciting the prospect of the Olympic Games in London is. It is a possibility—we hope that it is more than that—that we must all relish. It would do a tremendous amount for London, the United Kingdom and the morale of the nation, and we must hope that it succeeds. In view of what I am about to say—it will be very much in furtherance of the interesting arguments developed by the noble Lord, Lord Addington—I should stress that I am an honorary officer and trustee of a number of voluntary and charitable organisations. Today I want to speak about their concerns.

I add in parentheses that more than 50 years ago I took a step regarding my own political future that has led to my being on these Benches today. One of the reasons that I took that step is that I believed in a society that got right the balance between private affluence and public expenditure, and believed that taxation, for example, was the membership fee of society. I believed that we should have wholesome and imaginative debates about what we wanted to do as a society, and then be prepared to fund them directly from taxation. That is a much bigger argument, but it is one that begins to go by default. It is time that we took the opportunity—in this House, perhaps, if nowhere else—to re-examine the principle of where in important national priorities we should strike the balance between the responsibility of direct taxation and other means of financing what we as a society want to do.

The National Council of Voluntary Organisations is a very important gathering of all the principal active voluntary organisations in the country. It also has many smaller organisations in its ranks. Therefore, when the NCVO speaks powerfully, it is important to take seriously the arguments that it advances. The NCVO has prepared very interesting brief on the Bill. I do not, therefore, apologise for spending time referring to some of the salient points in that brief, as they are well researched and well put. The NCVO has profound doubts about the ability of the new Olympic lottery games to raise the estimated £750 million required to stage the Olympics, in addition to that which is committed to be raised for the existing good causes. It seems highly probable that such new games will eat into sales of other games thereby reducing returns to the existing good causes.

The regulatory impact assessment of the Horserace Betting and Olympic Lottery Bill suggests that 59 per cent of the estimated £750 million to be raised by Olympic lottery games over their seven-year lifespan might come from sales diversion from existing games. Based on 2005–06 income forecasts, that would have an annual reduction to good causes of some £64 million, from a highpoint of £450 million in 1999–2000. Taking into account the decline in ticket sales over recent years, that would leave the community fund with only £198 million in 2005–06.

The NCVO is also concerned about the powers in the Bill to permit the Culture Secretary to transfer funds from the National Lottery Fund to the Olympic Lottery Fund. The NCVO assumes that those powers would be used if the Olympic Lottery games failed to raise the required £750 million, or if the contingency of £410 million were required for any other reason. If that happened, it would further reduce returns to existing good causes. At present, a 12 per cent duty applies to each lottery ticket, bringing in some £549 million per year. The original rationale for that was to compensate the Treasury for duty lost from other forms of gambling as people switched to playing the lottery.

The NCVO argues that the original rationale for that 12 per cent duty has become questionable because of recent changes in how other gambling activities are taxed and the growth that the market has since experienced. It believes that the time is now right to reassess the use to which that money is put, and suggests that the overriding aim should be to maximise return to good causes. In that context, the NCVO proposes that half of the tax take should be redirected into the lottery prize fund for mainstream games, thus helping to reinvigorate the lottery with more and bigger prizes, and in the long term increasing returns to good causes. The remaining half of the tax should then he redirected to the existing good causes in the same proportions as the proceeds from lottery gains. That would help to maintain returns to the existing good causes when Olympic lottery games are introduced, and it would go some way to protecting against the impact of a 59 per cent sales diversion from mainstream games to Olympic lottery games.

That brings us to the Culture Secretary's powers to transfer lottery funds. The NCVO believes that the powers to permit the Secretary of State to make payments from the National Lottery Distribution Fund into the Olympic Lottery Distribution Fund set an unnecessary and worrying precedent. It proposes that the Secretary of State should instead be given powers to transfer unclaimed lottery prizes into the Olympic Lottery Fund. Total unclaimed prizes were worth more than £590 million at the end of 2003. That compares with the contingency of £410 million that would otherwise come from the National Lottery Distribution Fund after 2009, if that was required. The NCVO's proposal would allow for such a contingency without the need to raid the good causes. Unclaimed prizes are currently distributed to the existing good causes in the usual proportions. That money is additional to the 28 pence in each lottery pound that they already receive. In effect, it is a bonus.

In preparing to take this Bill forward for this immensely important objective of the Olympic Games in London, I hope that the Government will take very seriously the considered and careful analysis by the NCVO of what, no doubt unintentionally, the adverse implications may be for the voluntary and charitable sector. I hope that my noble friend, on behalf of the Government, will be able to say very specific reassuring things about this matter in his winding-up speech; and that, as the proceedings on the Bill go forward, specific amendments—where necessary—may be brought forward by the Government to meet some of the genuine anxieties that exist.

3.50 p.m.

Lord Brooke of Sutton Mandeville

My Lords, as a former Member of Parliament for a London constituency. I join the noble Lord, Lord Judd, in expressing enthusiasm for our Olympic bid. I am old enough to have taken an informed interest in the 1948 Olympics, for which, of course, we volunteered rather than applied. I shall speak about the first three parts of the Bill in that order, though reasonably briefly in each case.

As for Part 1 on the Tote and its future, though a regular Tote customer on course, I am not qualified to speak in depth. I can still recall with pleasure the late Lord Woodrow Wyatt's annual lunches, though I doubt if I have to declare a retrospective gastronomic interest. I recall with even more pleasure his annual speeches thereupon. My other incidental Tote pleasure has lain in attending Arab horse racing, not in the Gulf but on the spacious racecourse attached to the Royal Artillery camp at Larkhill.

Those of your Lordships who read 50 or so years ago the novel Mountolive by Lawrence Durrell—the third in that particular Mediterranean Quartet—will recall the marvellous description of a duckshoot in Egypt attended by the eponymous Mountolive, either the British ambassador or the commissioner, I cannot recall which. Some flavour of that Egyptian scene is mutatis mutandis transferred to the Larkhill course even if the purpose of the event is different. The occasional British spectators at Larkhill who are ignorant of the general Arab horse racing scene recognise fairly early on that the data which underlay Damon Runyan's famous aphorism put into the mouth of one of his more memorable characters—that the race is not always to the swiftest but that's the way to bet—are not so readily available in that exotic racing niche, but a worthwhile proxy is to see which Arab horses the more experienced jockeys have chosen to ride.

If you ignore Damon Runyan altogether, and perversely turn the proxy alternative upside down by going for the outsiders, the Tote affords one the ineffable pleasure of seeing that more than £200 of potential winnings are available on first place for a particular outsider because you are the only person on the course who is backing that horse. It is, with experience, a temporary and expensive boost to one's ego, but briefly extremely pleasurable.

On Part 2, the abolition of the horse race betting levy system, I suppose I should declare an interest as being related to my noble kinsman Viscount Brookeborough, for it was his side of our family that in 1934, also in Egypt, created the Brooke Hospital for Horses. Mentioning that interest is prompted by the letter others of your Lordships may have received from the League Against Cruel Sports evincing its concern about the welfare of a minority of retiring and retired race horses which may be affected by the abolition of the levy and thus its welfare contribution without cast-iron guarantees being expressed either by Ministers or in the Bill. However, that issue is for Committee. Incidentally, I am not in any way raising this issue in order to imply that horse racing is a cruel sport.

I am more concerned by the anxiety expressed by the British Horseracing Board that if in the autumn of this year the European Court of Justice were to overturn the High Court judgment in support of the British Horseracing Board's database rights, which was referred to the ECJ by the Court of Appeal—and I should declare an interest in that my brother sits in that court—racing's ability to provide an adequate and sustainable commercial replacement for the levy would suffer serious repercussions. Like others of your Lordships, I look forward to hearing what the Minister has to say in further comment on that.

On Part 3, the national lottery and Olympic lotteries, I can comment most, at least at the generic level. I am delighted that the Government are seeking legislative cover for this project or projects. Because I was the "master mason" of the National Lottery etc. Act in 1993—I would not dream of calling myself an architect of it, though you could staff a decent-sized architectural practice with those who might make that claim—I was particularly preoccupied in the lottery's early days to sustain on behalf of the Government both the arm's length principle and the principle of additionality. I think it surprised the first holder of Oflot—I always personally regretted that his initials were not AER since he would then have become "AEROFLOT"—that I never showed the remotest interest in Oflot's progress in selecting the winner of the lottery licence competition until he told me who had won late on the eve of announcing the winner on the morrow, but I was anxious to stand absolutely apart from what was not my business. I mean no criticism of the then Prime Minister, but I did personally regret the moment when, understandably from his own enthusiasms, which I myself shared, he said that the sports distributor of lottery funds would support the new cricket academy, for that did imply some degree of ministerial intervention.

I am, however, a little concerned about the implications of the new lottery purpose for the level of other funding of good causes, and in that I follow the noble Lord, Lord Judd. When we were rolling the pitch for the national lottery in the autumn and winter of 1992, concern was expressed by the NCVO that charities would suffer from funds that in a pre-lottery era might have come to them direct, being diverted instead by democratic choice to other good lottery causes and thus diluted. Our only direct paradigm for this particular dilemma at that stage was Ireland, and the evidence there was ambiguous because of the way it chose to distribute the residual proceeds of its lottery.

We did, however, have a medium-term solution—an annual debate, if Parliament wished it, which could by statutory instrument have changed the precise lottery distributor shares, and the long stop—in due course—of the disappearance of the Millennium Commission and the availability of its share for redistribution including possibly to charities.

The incoming Government in 1997 decided to change the distribution pattern through primary legislation. I regretted that this was sustained by a consultation dominated by other producer interests who understandably supported a redistribution to themselves. I subsequently had misgivings about the Government telling me of ventures in my constituency which the New Opportunities Fund had decided to support before the New Opportunities Fund told me so itself. That also smacked of too much government intervention.

However, that is all in the past. It is a privilege to be followed in this debate by the noble Baroness, Lady Pitkeathley, to whose speech I look forward. As the noble Lord, Lord Judd, foreshadowed in his speech, however, I am alarmed to see that the same anxieties that the NCVO expressed in 1992–93 are now being repeated by that organisation again a dozen years later in the context of this legislation. I am not aware of its having directly briefed me, but I was aware that the issue arose. I am not particularly attracted by any of the solutions suggested by the NCVO, but it implied further manipulations of the lottery which endanger yet again the principle of additionality, though the arm's length principle is more substantially protected by this Bill.

I will utter one brief footnote to the speech of the noble Lord, Lord Judd, where he said that the 12p that the Treasury takes was to compensate for other gaming or gambling betting expenditure being switched into the lottery. The 12 per cent is a minor matter of history but was decided upon by my noble friend Lord Lamont, then Chancellor of the Exchequer, and myself in a room with no other official present. The noble Lord, Lord Lamont, is not present so I am the only witness who can describe the event—that was how the figure was reached. The degree of precision—in terms of compensating the Treasury for previous expenditure—was not really gone into.

Lord Judd

My Lords, I am grateful to the noble Lord for giving way. Can we place on the record his charitable good will towards the interests of the Treasury, together with those of the noble Lord, Lord Lamont?

Lord Brooke of Sutton Mandeville

My Lords, I am very grateful to the noble Lord for saying that. One of the potential beneficiaries of the lottery thought that I had won a significant victory. I told that beneficiary privately that it was a quite exceptional mistake to air that view because if the Treasury felt that it had not taken enough, it would certainly want to secure its revenge. However, the figure was reached between the two of us in private.

The Minister and, possibly, the noble Baroness, Lady Pitkeathley, will have a chance to tell us more about this subject at a later stage. All in all, the Committee stage of this Bill promises to be both interesting and potentially rewarding if the draft gambling Bill and its prolonged pre-legislative scrutiny releases some of us in time to participate.

Finally, as the only member of the Delegated Powers and Regulatory Reform Committee to be taking part in this debate, I hope that the Government will look favourably on our observations on this Bill.

4.1 p.m.

Baroness Pitkeathley

My Lords, I shall declare two interests. The first is as a part owner of an extremely unsuccessful steeplechaser. That is not of concern to noble Lords, especially if I offer a tip for when he next runs. My most important interest is my position as chair of the largest of the lottery distributors, the New Opportunities Fund.

The first point I want to make is that the good causes support London's bid for the 2012 Olympic Games. A range of New Opportunity Fund programmes across the United Kingdom will support community-based projects linked to the Olympic bid and we believe that the interest in that bid will inspire greater participation in sport and physical activity. We are all concerned about encouraging the people of the United Kingdom to take more exercise.

All at the New Opportunities Fund understand that the implications of the new Olympic lottery games on existing good causes will be factored into calculations of future income and the funding available for programmes. We welcome that. However, noble Lords will appreciate that the good causes are worried that the amount of money they have will reduce as a result of the Olympic lottery games. We have to accept that some people will choose to play the new Olympic lottery games rather than the existing games, although we can only speculate on the potential impact. As we heard from the Minister, current estimates suggest that sales could lead to an average annual reduction in income of 5 per cent to the existing good causes over the period of the Olympic Games preparation; that is, from 2005 to 2012. These estimates have been taken into account for planning purposes.

It is important to recognize—and we do—that these games have the potential to reinvigorate interest in the lottery in general and therefore to benefit existing good causes. We believe that Camelot should help to minimise the impact on the existing good causes and that that can be done by the company continuing to launch non-Olympic lottery games. Since it is intended that staging the Olympics should bring benefits across the range of funding sectors, the new lottery games should be seen as part of a wider strategy for growth seeking to reinvigorate interest in the lottery as a whole.

I should make it clear that the New Opportunities Fund and the Community Fund are currently supporting the Olympic Games bid. The NOF is running a range of programmes that are directly relevant to it, including the new opportunities for PE and sport programme, school sports co-ordinators and Active England, which is a joint programme with Sport England. By funding new sports facilities and promoting activity across the country, these programmes will help to emphasise the regional dividend from London's bid for the Olympic Games.

Noble Lords will be aware that a new distributor is about to be created as a result of the merger between the Community Fund and the New Opportunities Fund. While these are matters for the new distributor, I know that it will similarly be concerned about falling ticket sales. Recent forecasts for lottery ticket sales show a small but steady decline, suggesting a further 5 per cent fall as a result of the Olympic lottery game. But I assure noble Lords that these forecasts are built into the spending plans of the new distributor. If there is no more than a 5 per cent fall, that should be manageable.

So far, so good, but I must express two serious concerns about the provisions in the Bill. I and others such as the NCVO, as we heard, are concerned about the powers to be introduced that will permit the Secretary of State for Culture, Media and Sport to transfer funds from the National Lottery Distribution Fund to the Olympic Lottery Distribution Fund. We assume that those powers would be used if the Olympic lottery game failed to raise the required £750 million, or if the contingency fund of £410 million were required for any other reason. If that were to happen, it would reduce further the returns to the existing good causes, which would be a major source of concern. I hope that my noble friend on the Front Bench can assure me that if the current or any future Secretary of State took those powers, he or she would pay the closest possible attention to the effects on the good causes before he or she used them.

The timing of the introduction of the Olympic lottery games is also of concern. A separate lottery funding stream can be justified only by the exceptional scale and one-off nature of staging the Olympics. The logic of that position is that the Olympic lottery games should not be launched unless and until the bid to stage the Olympic Games has been won. The contingency planning undertaken by all the UK and England distributors in conjunction with the Department for Culture, Media and Sport is based on the possible introduction of Olympic lottery games in July 2005.

I have made it clear that the distributors are understandably concerned about the potential impact of the new games on their funding programmes which, in spite of what one may read about balances, are already substantially, though prudently, over-committed. Not only would an earlier launch of the hypothecated games be difficult to justify, it would exacerbate the negative impact on our programmes and beneficiaries across the country. My concerns are focused in particular on the credibility of the new distributor and its role in leading the reform agenda in relation to lottery distribution.

I did not intend to comment on the dreaded problem of additionality, which always arises in discussions on lottery funding, but since it has been mentioned, I shall say a few words about it. I should not presume to speak on behalf of my fellow distributors, but I can assure noble Lords in the strongest possible terms that all the distributors are extremely concerned that what we fund is not a substitute for current or planned government expenditure. The concept of the added value of lottery programmes is dear to all our hearts. Should noble Lords want confirmation of that, I refer them to some of our recipients, those who receive and use the money so effectively. They will often emphasise strongly that lottery funding is different from statutory funding. Should noble Lords want any specific feedback, I volunteer to provide it.

Since it was set up, through its distribution of funds to good causes the lottery has made a huge contribution to communities in the United Kingdom, especially to disadvantaged groups. That contribution must continue and grow. Subject to the provisos to which I have referred, I believe that Part 3 gives us an opportunity to see that it does.

4.8 p.m.

Lord Soulsby of Swaffham Prior

My Lords, this Bill proposes to abolish the horse race betting levy system and to sell the Tote in order to raise money to make provision for hosting the Olympic Games in London in 2012. I am sure we all hope that the bid is successful and that we can celebrate holding the Olympics in this country.

I declare an interest in that I have had a connection with the Horserace Betting Levy Board for several years. I was chairman of the Veterinary Advisory Committee to the board for some 12 years. This is an area on which I wish to comment, in addition to other matters that might be considered minor. However, I want to comment on them in case they become lost in the major exercise.

Although the funding of the Veterinary Advisory Committee was only of the order of £1.5 million per year, it was the envy of many other countries where thoroughbred racing was practised but where no scheme such as the Horserace Betting Levy Board scheme was in operation. Over the years, it has funded research into important issues such as lameness and tendon injuries, and into infectious diseases such as flu, strangles, contagious equine metritis and grass sickness, which it is still investigating. It has also supported the training of research veterinarians and clinicians. Indeed, it was the only source of significant funding for equine research in this country as other organisations fund only non-invasive research, not the kind of research supported by the Levy Board.

The abolition of the Levy Board has raised concerns about the security of this veterinary support as well as its other statutory responsibilities, namely the improvement of horse racing and the improvement of breeds of horses. It is important therefore that Clause 16(6) of the Bill includes a specific direction of support for these areas and that it is committed to the undertaking given by the Minister in another place on 22 January 2004. He stated: We have always made it clear that the important work done by the levy board will not be neglected when it is abolished … The BHB, to whom the bulk of the assets will be transferred, has already given us an undertaking that it will continue to fund public-interest areas such as veterinary research and education. It will also continue to provide funding to welfare projects such as Retraining of Racehorses, which have in the past received levy board grants".—[Official Report, Commons Standing Committee D, 22/1/04; col. 074.] The noble Lord, Lord Davies of Oldham, has today reiterated that undertaking.

An area of particular concern is that of the fate of animals after their racing life is over, which involves some 4,000 horses per year. Although the vast majority are well cared for and go on to productive and enjoyable careers, in some 300 or so cases per year there is a need for charitable intervention. The charity Retraining of Racehorses serves this purpose well. It receives £50,000 per year from the Levy Board and, additionally, is well supported by charitable giving.

However, that other racing animal, the greyhound, does not have such support and yet the issues are parallel to those of the thoroughbred. There is now an opportunity to attend to this deficit, again under Clause 16(6) of the Bill.

There is concern that effective permanent arrangements are in place for the transfer of the Levy Board Capital Fund to a successor and that it continues long term to support investment in racegoer facilities, tracks, horse health and welfare and safety. The Racecourse Association proposes that to safeguard the capital fund a trust should be established to administer it which is independent of both the racecourse as beneficiaries and of racing's governing body.

Finally, I wish to comment on an important though minor area of support given by the Levy Board—that is, to rare breeds of horses. It is a relatively small amount—£130,000 per year—but it is an important source of funding in this area. In this country we have more native breeds of horses than any other country world wide. Of the heavy horses, the Suffolk Punch is the rarest, but the Shire, Clydesdale, Cleveland Bay and the Irish Draft are all increasingly rare. Of the ponies, the Exmoor, Dales, Fell, Highland, Feral Welsh and even the Hackney horse are on the rare list.

Support for the Rare Breeds Survival Trust would, to my mind, play an important part in maintaining our national heritage and we should not lose sight of that in this major reorganisation of the levy system. The new legislation does not specify what shall be funded, neither does it give any guarantee that funding will be safeguarded in either the short term or the long term. I hope that the Minister will comment on that point.

The need for funds to support the bid for and, if successful, the 2012 Olympics in London is accepted. But what happens thereafter? The Olympics are only eight years away which, in terms of veterinary research on the horse, represents only two tranches of approved studies and training for clinical research veterinarians.

I believe that many individuals associated with the numerous aspects of the racing of horses and greyhounds, both of which generate vast sums from betting, would wish to see these funds used to support the Olympics bid. But they would also wish to be assured of a fair deal for the animals that generate the funds and bring so much pleasure to the public.

4.17 p.m.

Lord Lipsey

My Lords, I declare a double interest. First, like the noble Baroness, Lady Pitkeathley, I own part of a horse—in my case, a very useful horse—but, before my noble friend drools too much in envy, I should inform her that it is only half-way through two years off the course with a tendon injury.

My second interest is a more serious one. As the noble Lord, Lord Wakeham, mentioned, I am chair of the shadow trust set up as a precursor of the trust that the Government intend will own the Tote on behalf of racing should the Bill become law. I have a strong personal interest in the Bill. I have spent much of the past three or four years agitating, behind the scenes and in front of them, in favour of this legislation. So this is an exciting day for me.

Although confining my remarks to the part of the Bill concerned with the Tote, perhaps I may set the Bill in a wider context. My excitement goes wider than the effect the Bill will have on horse racing. It is a major step forward in public policy in a way that is frequently not mentioned.

The Bill represents a rare occurrence—that is, a measure of nationalisation without compensation. There is nothing in the Bill about Tote trusts and so on; it is merely a measure to nationalise the Tote without compensation.

For a great deal of my time in the Labour Party, such measures have been one of the main subjects of discussion. Until recently, the party was committed to nationalising everything under Clause 4 and the lefties—my noble friend Lord Smith will remember this—were calling for the nationalisation without compensation of the 250 major monopolies. I am sure they are surprised that a government under the leadership of Tony Blair should produce a measure of nationalisation without compensation, but I am not sure that they are quite so pleased that this has been done for the benefit of horse racing,

I say this because it is quite significant how swiftly nationalisation—at one point the central objective of one of the major parties of state—is now accepted to be an inefficient way of running industry. I do not want to go through all the reasons why that was so—the lack of incentives, state interference and so on—but there are no advocates of nationalisation left; we are all privatisers now.

On the other hand, recently we have observed a certain discomfort—I put it no higher than that—with some of the forms that privatisation has taken; for example, some of the huge windfall profits that have resulted for the City and some of the salary increases that have been granted to the people concerned. There is a feeling that there might be something other than full, red-in-tooth-and-claw privatisation as an alternative to nationalisation which combines the best of both worlds.

In the Bill before us, or at least in the Government's intention about what should happen once the Bill is passed, we see just such an alternative. On the one hand, we shall get the benefits of privatisation. It will no longer be the case that the state can interfere with the development of the Tote. The management will be left to get on with the job and will be incentivised to do so. If it fails, it will be got rid of without any need for Ministers to be involved. Much as I too loved Lord Wyatt, I do not think that if he had been appointed by the Tote shadow trust his tenure as chairman would have been as long as it turned out to be under the patronage of successive Tory Home Secretaries and Prime Ministers.

That is one side. On the other hand, the Bill is not to create a bonanza for the City or to make a few men very rich. It is to benefit and enrich an industry that is, as the noble Lord, Lord Wakeham, said, central to our national life as an industry and as a sport. That is the wider picture that we should bear it in mind. We must not forget it as the Bill goes through.

Having wasted too much time in partisan wrangling over ownership, I take great comfort in the fact that, as a pragmatic way forward, I understand that the Bill has the support of the Government, the Official Opposition, the Liberal Democrats, the many Cross-Benchers who have spoken on it and of men and women of all parties and none.

I welcome the principle of the Bill very much but I want to raise two caveats. I must tell the Minister that we shall come back to them ad nauseam in Committee. The first is the price. How much will the Tote be sold to the racing trust for? If it is to be sold at full value, it will not be of much use to racing. Racing would find its present income taken away from it to service the necessary debt.

I have no doubt that the correct price is zero. The Government did not set up the Tote. It was set up by a Private Member's Bill in 1928 with no help from government. The Government have not put one penny into the Tote. They insist that they do not stand behind the debts of the Tote. Throughout the Tote's history, governments have inhibited its development. It was prevented from betting on other sports. It was prevented from having betting shops. It was prevented from having fixed-odds betting—the noble Lord, Lord Wakeham, referred to the work of the noble Lord, Lord Carlisle of Bucklow, on that point. More recently, the Tote was unable to move into the offshore on-line betting market because it was state owned—a company whose board was appointed by the state, to be accurate—and that was not the sort of thing such a company was allowed to do. The only positive contribution of government to the Tote is the exclusive licence, which we will lose in fairly short order, although we are glad of the seven-year concession. So the Government have no right to a penny for the Tote and I insist on that as a principle.

Having said that, I am a pragmatist and I know that the Government would not bring the Bill forward unless they get some consideration. I know that there are European state aid considerations that have to be weighed. I therefore know that the price will not be zero, much as I would love it to be. But it is essential that the price should be reasonable. It should be based, not on the open market value of the Tote, but on its value in a sale from a single seller to a single buyer—namely, the trust—and it should make full allowance for certain things in the Tote's balance sheet which reduce that value, such as its pension fund liabilities. In other words, the price must be reasonable.

That will be negotiated after the Bill has gone through. There is a hazard there and that is what I turn to next. The Bill simply nationalises the Tote. There is nothing in it about selling it to a racing trust, although I noted the reassuring words of the Minister. But what would happen if the day after Parliament passed the Bill we had a change of Secretary of State or a change of Government? Perhaps the Treasury gets into an unusually greedy—perhaps a usually greedy—mood and the Government suddenly decide that they would rather sell the Tote to Ladbrokes for loads of money than sell it to racing for a more reasonable sum. I do not believe that the Government are planning any such thing and I believe their assurances in this regard, but life changes in politics.

As the Bill is drafted, there is nothing to stop the Government. They could go ahead the day after Parliament has passed the Bill and flog the Tote to the highest bidder to line the pockets of the Treasury or for whatever reason. That is not the Government's intention, but intentions can change. I think that it is crucial that, before the Bill leaves this House, a clause should be inserted that says that the Government may sell other than to a body standing for racing only with the permission, by vote, of both Houses of Parliament.

Note what I am not saying. I am not saying that if the Government want to sell to someone else they have to pass a new Bill. That would be too much. I chair the Racing Trust and, angelically as we have behaved until now in a spirit of perfect amity, I can imagine circumstances in which it falls apart and it was therefore impossible to go ahead with that sale. Racing has been known to fall apart as the noble Lord, Lord Wakeham, also pointed out. In that case it would be perfectly reasonable for the Government to come back to Parliament and say that the Racing Trust cannot buy the Tote and so they are going to flog it to A, B or C and for Parliament to approve that. So we are not asking for a new Bill, but we are asking, and will ask, for an affirmative resolution of both Houses before that happens.

I was surprised and disappointed by the Minister's remarks on this point because he said that it would be a waste of scarce parliamentary time to require such a procedure. What is this Parliament for? We would be talking about a government who were attempting to do something that was in direct contravention of the understanding on which they had put through the Bill. It would be a government who were proposing to do something that was a direct breach of an explicit manifesto commitment and were attempting to do it without parliamentary approval. If to debate and vote on that is a waste of parliamentary time, we waste a lot of parliamentary time in this place. It is essential that such an amendment is made to the Bill and we shall press that point until we are satisfied.

This is a good Bill. The minor change that I am proposing, to which there can be no reasonable objection, will make it a better Bill. After that, it will be the duty of the Tote and the trust, which I have the honour to chair, to turn the Tote, which is a much-loved British institution, into an institution that is also a powerhouse of British bookmaking, so that the great horse racing industry of our country can flourish and prosper.

4.28 p.m.

Lord Glentoran

My Lords, I must declare two interests. First, I am a still serving member of the Millennium Commission; and, secondly, I am a living Olympian.

Unlike the previous speaker, the noble Lord, Lord Lipsey, I shall not talk about the Tote. I wish to make a few comments about the forthcoming Olympic bid. On 15 May last year, the Secretary of State made a Statement announcing that the Government had decided to back a bid to host the Olympic Games and the Paralympics in London in 2012. The Government and the Mayor of London have agreed a funding package of up to £2.375 billion to help to meet the costs of staging the Olympics in London in 2012, including support for elite sport and associated sports events. Under the plan, the national lottery will contribute £1.5 billion, primarily from new Olympic lottery games, to be provided for by the Bill and the existing sports lottery streams.

I am pleased to assure the House that I wholeheartedly support London's bid for the 2012 Olympics. Indeed, I expect and hope that a Conservative government will have the pleasure of being in power during the planning stage and the hosting of the Games. A successful London bid would provide huge benefits for the people, not only of London, but of the UK as a whole. It would lead to regeneration, providing jobs and prosperity in London and beyond. It would further reinvigorate British sport, and increase the active participation of young people in particular. It is a fantastic opportunity, and I am delighted that there is support across the political divide for the London 2012 bid.

The main provisions of the Bill concerning Olympic Lottery games provide for the regulator—the National Lottery Commission—to license Olympic Lottery games; the establishment of a fund to hold the proceeds generated by those games; and the establishment of a body to distribute money held in the fund. I shall say a little more about that in relation to the future of the Millennium Commission. The Bill also provides that the money held in the fund is to be distributed to meet expenditure in connection with staging the 2012 Olympic and Paralympic Games in London.

I want to impress on the Minister how important I believe it to be that the Government are seen to give their wholehearted support to the Olympic bid. So far, the Government have done quite well in that respect. However, I believe that the Bill offers an additional opportunity to demonstrate the Government's total and unimpeded commitment.

The Government's decision to keep the tax that will be generated by the new Olympic Lottery games for the Treasury, rather than hypothecate it for the Games, was referred to earlier. As my noble friend Lord Brooke pointed out, that relates to 12p in the pound, or 12 per cent. I believe that the Government should hypothecate that tax so that the extra funds can go directly to the staging of the Games. At the current 12 per cent rate of tax, that would raise about £320 million over the seven years, which equates to about half the amount that it is anticipated will be raised by the precept on London council tax payers, which I am sure that noble Lords will agree is not unreasonable.

I am aware that, so far, Her Majesty's Government have shied away from making that commitment. The Chancellor has been wielding the big stick. I am sure. I hope that the Minister will be able to have a little influence on the Chancellor of the Exchequer on that point; I wish him luck in the attempt. Apart from the financial situation, such a commitment would, most importantly, send another powerful message to the IOC of Britain's determination to host the Games.

I want the Olympic Lottery games to be successful. In a time when lottery sales are in decline, it is vital that the games are publicised and supported. Surely the forthcoming Athens Olympics this summer represents the perfect opportunity to launch the lottery games. I am aware that the IOC has ruled that a lottery which funds the Games cannot be launched before the winning bid is announced. However, it is perfectly possible to start the games this summer. That is where my ideas about the future of the Millennium Commission come into play.

The Millennium Commission is already a distributing body; it is in being. It has a remit, which admittedly is running out, to celebrate 2000. I suggest that it would not take a very large piece of legislation to change that remit to celebrating 2012. I know from tests that we have done over the years, within the department and outside, that the Millennium Commission is highly thought of by the general public and the lottery players in this country for what it has done.

Using the Millennium Commission, we should be able to start to turn the clock back. My noble friend Lord Brooke made a clear distinction about "arm's length" and "not for use by the Government". It was for such projects that the lottery was originally set up. When I first joined the commission and when my noble friend set it up, 50 per cent of lottery funds went to good causes. That is not so any more—they go to a number of government initiatives in various disguises. It is high time to return lottery funds completely and wholeheartedly to good causes and arm's-length issues. What better cause than promoting the 2012 Olympics?

I would be interested to hear from the Government what private sector involvement they expect, and what steps are being taken to stimulate such involvement. The bid currently has all the appearance of a public sector activity funded by lottery funds, council tax payers and even—dare I say it?—national taxpayers through the London Development Agency. Many successful recent Olympic Games—certainly the past two—have harnessed the resources of the private sector to deliver considerable income for expenditure on facilities and infrastructure for the Games. I hope that the Minister can reassure the House that the Government intend that the private sector will support the public funds that will be available from the Olympic Lottery games and council tax.

4.35 p.m.

Lord Smith of Leigh

My Lords, I also broadly support the Bill. I am sure that the Minister must be overwhelmed by the amount of support that he has had today. When one makes the final Back-Bench contribution, it is always difficult to find something fresh to say, particularly when one follows the noble Lord, Lord Lipsey. However, I shall speak from a different perspective on the Tote, as I own no racehorses but only two cats. I intend to speak largely on Part 1, but I would like to make some brief comments on Part 3.

From my perspective, coming from the north-west, I want to say that the bid is not a London bid, but a UK bid. We should all get behind it. One of the successful aspects of the Games these days is to make sure that there is provision of training camps at different locations at which the teams can prepare and acclimatise prior to the Games themselves. Such camps will obviously need to be spread around the country and based on existing facilities. I ask my noble friend to clarify whether Clause 30, which provides for facilities outside London to be paid for as part of the lottery, can be used for training facilities as well as for direct facilities to do with the Games. If he cannot do it today, I ask him to write to me, and I hope that he answers in a positive way.

My interest in Part 1—the sale of the Tote—stems from my main job, which is leader of Wigan Council. I want to praise the late Lord Wyatt. He came up to Wigan in the mid-1980s and, following a meeting with the council, decided to move the Tote's credit division up to Wigan. Being Lord Wyatt, he wanted it done there and then, so the council had to vacate an office block to facilitate the Tote's move to Wigan. I hope that it has been a terrific move for the Tote; it has certainly been terrific for us. The number of staff employed by the Tote in Wigan has trebled from its original number to more than 600, making it the second-largest private sector employer in the borough. The Tote's business plan proposes that it transfer the remainder of its operational divisions to the borough, bringing in more than 250 additional jobs.

In Wigan, the Tote does not simply provide jobs. It is an excellent employer, working with the council on a green travel plan, and is recognised for the work that it does in employing disabled people. Both its managing directors who have worked at the Wigan site have contributed their skill, time and experience to help to regenerate the borough. I hope that noble Lords can understand why I am so concerned that the changes proposed by the Bill make sure that the Tote and its successor continue to operate successfully. For 75 years, it has been a remarkably successful organisation, providing a fair deal and a wider choice for punters, and reinvesting the surplus into racing, to the tune of more than £100 million in the past decade.

Much has been achieved despite the Tote's current status with government supervision, which has not been conducive to releasing the entrepreneurial and innovative skills of its staff. The noble Lord, Lord Lipsey, alluded to the matter and gave the example of the technology, saying that it was opening up new ways of betting and gambling but that the Tote was forced to follow. It could not lead on this. It was playing "catch-up" because permissions were slow in coming from government departments.

The Bill implements the 2001 Labour Party election pledge. It has great support from the House, the industry, and the Transport and General Workers Union, which represents the staff employed. That is a remarkable consensus. I pay tribute to the Minister for Sport who was present earlier. His personal lead has been important.

However, there are two matters of concern—they have been raised by other noble Lords—which I must again raise with the Minister. It is much appreciated that the Government have now confirmed in the Bill the seven-year exclusive deal. Seven years is the minimum period for the protection of the Tote's successor before opening up to full competition. That period has been accepted by all concerned. We must now work to ensure a successful transition. In a Statement in November, repeated at Second Reading in another place, the Minister for Sport was adamant that there could be no extension. The Minister in this House made the same statement earlier. However, there may be some circumstances in which the interests of the racing industry, the punters and the Tote as an organisation may benefit from such an extension. I do not know what they could be, but it is important never to say "never" in politics. The Government should allow themselves more flexibility.

As my noble friend Lord Lipsey made clear, the key is the price at which the Tote is sold and the process by which that is achieved. The price must be fair to the successor trust, reflecting the minimum period of the exclusivity agreement. It must not saddle the trust with a debt which takes money out of racing. I believe that the Minister for Sport will be reasonable but we know that other pressures prevail in government. As the noble Lord, Lord Lipsey, stated so eloquently, the Exchequer has not contributed to the Tote as an organisation. It has not put taxpayers' money into it. Nor does it at present receive any income from the Tote. Therefore, anything it receives from the sale is an unexpected bonus.

I hope that when the Minister sums up, he will outline what the Government intend to do if they cannot over time reach agreement with the Racing Trust. That matter concerns us. I fully support the nature and intention of the Bill. It will sell the Tote to the Racing Trust, which will operate in the interests of racing. It will have the freedoms and flexibility to compete effectively but will be good for an organisation that I want to succeed. However, I do not necessarily support a sale to the highest bidder. I hope that the Government realise that they have the backing for their manifesto statement but I hope that the Minister can assure the House as regards anything else that may occur.

4.43 p.m.

Viscount Falkland

My Lords, I wish to deal with the part of the Bill which deals with the transfer of the Tote to a private trust. My noble friend Lord Addington dealt admirably with the part of the Bill which deals with the Olympic lottery.

As no one else has done so, perhaps it is appropriate to sketch the background of racing against which the proposals are set. Racing in Britain is some 250 years old. I think that I am accurate in saying that it has set the pattern and standard of thoroughbred racing around the world. Today racing is in a very good state. The component parts of racing—it is now a complex industry—have gone through a period of unprecedented squabbling, argument and discussion, but we are seeing a resolution of that. Life is far more complex with the advent of new technologies, the number of horses that run, security problems and so on. A number of areas of racing are becoming more efficient. When the grandees and the super rich of the early 18th century raced their prized thoroughbreds against each other on pieces of land which became the racecourses of England, 59 of which survive today, racing was a fairly simple matter. As we came into the 19th century, it managed to garner interest from the public at large. It was, and I maintain still is, one of the linchpins of a relationship between urban and rural Britain—a relationship which has become strained in recent times.

The racing and bloodstock industry accounts for 60,000 jobs. A further 40,000 jobs in the betting industry are related to racing. The development of betting has again been a model to the world, although we have taken a somewhat different course from most other countries. In most other countries one finds a tote monopoly. Monopoly is a difficult word to use. From the Government's point of view, it is easier to run racing in a country with a tote monopoly. It is a dirigiste way of doing so. It is easier for the Government to extract what they require and to disperse for the benefit of the industry.

However, in this country in the 19th century, bookmakers fell in step with the new laws governing betting. Those who did not wish to do so went to France. That again was a contributory factor to the French going for the pari mutuel system. They did not want what they understood as bookmaking, having seen the disreputable part of our industry which had emigrated to France. That is one of the circumstances of history.

Bookmakers in this country have worked responsibly to the benefit of racegoers in a fairly liberal regulatory environment. In 1928 the Tote was created for those who did not want to bet with bookmakers. There are still those who do not want to bet with bookmakers. It is noticeable that the biggest tote pools in racing are on those occasions which are largely social by nature. At Royal Ascot and Cheltenham people may have difficulty in moving around, apart from anything else; but people who are new to racing prefer to bet in the pool rather than with the fixed-odds bookmakers. That has not been to the benefit of the Tote because it has had to compete. Although the Tote is a monopoly of the pool betting, for which it was given a licence, it has had to compete with the bookmakers—and not altogether successfully.

As the noble Lord, Lord Wakeham, said, the noble Lord, Lord Carlisle, was instrumental in bringing about the change which allowed the Tote to buy into fixed-odd bettings through betting shops. It became de facto a bookmaker because the majority of its profits came from those shops which ultimately kept the Tote alive and enabled it to run the tote pool even though it was often a difficult part of the operation to run. Today 22 per cent of its turnover is related to the Tote; the remainder is fixed-odds bookmaking in a considerable chain of betting shops. Because they came late on the scene, many of them have not been easy places from which to generate profits but they have done extremely well and all their profits have gone back into racing after the usual deductions.

The Minister gave a clear exposition of the proposals. However, I detected from his tone of voice, although he spoke somewhat sotto voce, that he rather favoured the ruling of the Office of Fair Trading that the Tote is a monopoly; it is not competitive.

It is a curious argument. Why is the Tote pool something that we should allow on sufferance only for the seven years, although I am grateful for that, when the Lottery is allowed to continue? Is that not anti-competitive?

A successful Tote needs a large pool to satisfy those who bet into it. The more the pool is diluted the less successful it will be. That is a reality of life which seems to have gone over the heads of the staff of the Office of Fair Trading, who are probably better educated than I am. That unreality regarding racing passes over into the group selling of media rights and so forth. Again, they are not worried about the group purchase, but the group selling. They do not seem to be aware, or have a sense of history, of the uniqueness of the sport. It is a sport which, because of the looseness and the poetry of the English language, is called the "sport of kings". Rather, it should be called the sport of the common man and has been an example to the world.

I do not wish to talk about my misspent youth but, from my own experience, there is no place like a racecourse for class differences quickly to disappear. Everyone there speaks and mixes together, whatever their background or economic circumstance. I know of no other such place, except possibly the House of Lords.

The noble Lord, Lord Lipsey, sells himself short by saying that he has been agitating for a number of years. He has not been agitating, he has been persuading and explaining his case to everyone, and I congratulate him. I was one of the thorns in his side, because I have been, and still am, fearful of the potential ultimate demands of the Treasury in the sale to the private sector. I do not believe that we have heard the end of that, although I accept the good faith of the Government and that they intend to carry out the sale for the benefit of racing.

However, questions have to be asked and I agree with the noble Lord, Lord Lipsey. He has persuaded me that I need have no fear regarding the retention of the betting shops—my original criticism was over how one could obtain a reasonable price if the main value of the sale was in the betting shops. For their own reasons, the bookmakers echoed my concerns in that regard. The noble Lord explained that it was necessary for the Tote to be transferred as a whole, because the betting shops are a useful part of its organisation. It is probable that new technologies will allow an enlargement of pool betting if more people from other countries are tempted to enter our pools. It is unrealistic to break up the Tote pool into pieces because we have on our doorsteps a possibly flourishing Tote pool which will draw in betters and punters from other countries.

The transfer process is an anomaly and I do not expect to understand it, even when the Bill is completed. I accept all of the comments made by the noble Lord, Lord Lipsey. It seems that the transfer will be quick. When I saw the Minister outside the Chamber he told me that an effort of political will was initially driving the Bill. I am cheered to know from the noble Lord, Lord Wakeham, that there is a precedent for it in the TSB sale. I hope that the Tote will ultimately go to the trust. The shadow trust, chaired, as it should be, by the noble Lord, Lord Lipsey, is admirable. There is no man who better understands the subject. I hope that he will bring pressure on the Government regarding the matters that concern him.

If the sale falls through, for whatever reason, the Government should come back to both Houses and explain what they intend to do and obtain approval for it. Whether that should be on the face of the Bill, I leave to others who better understand parliamentary procedure.

The price is still the main stumbling block. I met the Sports Minister, Mr Caborn, at a film awards ceremony last week and told him that I intended to speak on the Bill and was still concerned about the price. He said. "Well, so am I, but it is up to the Treasury and you know what the Treasury are like". I do know what the Treasury are like. It is talking about a 50:50 sale—50 per cent for the Government and 50 per cent to the trust, and I hope that will be raised in Committee.

I shall mention other areas of racing in passing. For example, the National Stud was an extraordinary operation. At one time it was the only profitable nationalised industry. It was enormously successful and an important part of the racing scene, even when it was not particularly profitable. I understand that it may also be subject to a transfer of some kind. My noble friend Lord Addington seemed doubtful where I stood on this issue—since I left the Front Bench as a Whip I hope that I have not gained the reputation of a maverick or a wild card—but I assure him and the noble Lord, Lord Lipsey, that I am in favour of the proposed transfer and have utmost confidence in the shadow trust. I hope that it will be transformed into the permanent trust and that the Tote will grow, contribute to racing and will be at arm's length, if not, racecourse length, from political interference.

To coin a phrase, there is much to be taken on trust, but I wish the Bill well.

4.57 p.m.

Lord Moynihan

My Lords, this House has a proud tradition of cross-party work for the benefit of sport and I sense and trust that that will continue with the Bill.

Her Majesty's Opposition welcome it in principle and pay tribute to the work done in another place, not least by our colleagues, the honourable Members for South East Cambridgeshire, Jim Paice, and Surrey Heath, Nick Hawkins. After hearing the opening remarks of the noble Lord, Lord Lipsey, I am tempted straight away to quote from the speech made by my honourable friend, the Member for South East Cambridgeshire at Second Reading, who said: There is nothing in the Bill about future ownership of the Tote; there is not even a requirement for it to be sold to someone with an interest in racing or horses. I hope that the Minister will understand that despite his assurances the industry is a bit distrustful of the Government for not dealing with the question of the shadow Racing Trust and the future ownership of the Tote in the Bill. Under the Bill there would be nothing to stop the Secretary of State or any future Secretary of State deciding to sell the successor company to the highest bidder—someone who may have no interest in racing or in putting the profits back into racing".—[Official Report, Commons, 8/1/04; col. 449.] Some improvements have been made since that speech, but I agree with the comments of the noble Lord, Lord Lipsey, that not enough have been made to allay the concerns expressed in the House today.

However, I shall return to 30,000 foot. All three core elements of the Bill—the nationalisation and subsequent sale of the Tote, the eventual abolition of the Levy Board, and the establishment of the Olympic lottery—have our support. However, as I have stated, we will look to improve some of the measures outlined in the Bill.

We welcome the improvements made in another place, particularly regarding the seven-year period and trust that the Government will continue to listen to the arguments. As we have heard this afternoon, the House is blessed with many noble Lords with an expert interest in sport, particularly horseracing.

While sport is important in its own right, it is also big business and we must be particularly aware of that during our discussions on the Bill. Some 100,000 jobs, as the noble Viscount, Lord Falkland, said, are directly or indirectly dependent upon horseracing—including bookmakers, groundsmen, vets, saddlers, stable staff and others. Horseracing is also a major contributor to the rural economy. The Olympics is the biggest sporting event in the world and the Government's analysis shows a budget in excess of £4 billion, with a public subsidy of up to £2.375 billion. That would be required for London to host the games in 2012. By any measure, this represents big business.

Members will be aware that the Conservative Party fully supports the London bid. Indeed, we came out in support of the bid before the Government. At its best, sport cuts across party divides and we should be loath to forget that for every page of politics in the national newspapers there are some five of sport.

I move to Part 1, the sale of the Tote. I am sorry that my noble friend Lord Astor cannot be with us today. He has prior commitments and much regrets not being able to be with us. In his absence, I want to pay tribute to his Private Member's Bill, the Horserace Totalisator Bill, which would have brought forward the sale of the Tote in 2000. Having perused the discussions in another place, the Minister for Sport and Tourism seemed to be unclear as to whether the Bill enabled or committed the Government to sell the Tote. Similarly, does the Bill require the Government to abolish the levy in September 2006 or does it enable the Government to do so, if they so desire? I would be grateful for further clarification from the Minister on those points.

The mechanics of the sale are that the Government will nationalise the Tote with the promise that it will then be sold to a racing trust. Ideally, this would be the Shadow Racing Trust under the able chairmanship of the noble Lord, Lord Lipsey, equally well assisted by the noble Baroness, Lady Noakes, and his team. There was much debate about the word "promise" in another place. Understandably, the Government are being pressed again today.

We have a duty to ensure that this Bill puts in place safeguards for the Tote's continuing contribution to racing. However, there is nothing in the Bill about the future ownership of the Tote. There is no requirement for it to be sold to the Shadow Racing Trust or, indeed, to any racing trust. It is crucial that the clauses sought by the noble Lord, Lord Lipsey, are agreed, for despite government assurances we are uneasy that the Government are not dealing with the question of the Shadow Racing Trust and the future ownership of the Tote in the Bill.

I repeat that under the Bill there will be nothing to stop any future Secretary of State deciding to sell the successor company to the highest bidder with no requirement to put any of the profits back into racing. It surely cannot be a waste of parliamentary time to hold the Government to their promises. We believe that the Bill needs explicitly to state that the Tote will be sold to a racing trust that is committed to returning any surplus of income to racing. It would be helpful to learn from the Minister whether the constitution of the Shadow Racing Trust is a not-for-profit body or whether it should be one of the new community interest companies.

As Members will be aware, we have a clear and unambiguous government statement that the Tote assets are owned by the Tote and that the Tote is owned by no one. The Bill creates the power for the sale of those assets first by nationalising them and then by privatising them, leaving the Chancellor with a tidy cash sum. It has been suggested that it is wrong for the Government to make any money from the sale of something that they do not own, as the noble Lord, Lord Lipsey, argued with his characteristically incisive eloquence.

No doubt the Government will tell us that their hands may be tied and that they have been in discussions with the European Commission over the proposed transfer. It seems as though the 50:50 arrangement referred to by the noble Viscount, Lord Falkland, will be agreed. If so, can the Minister confirm that? If he can confirm it, is he willing to put on the face of the Bill the sale price or, more important in the context of time, at least the formula for determining the price? This is the most important point I want to make in my remarks on Second Reading. The price charged by government for the Tote is vitally important.

The racing trust will have to borrow money to pay for the Tote, thereby reducing the money that can be returned to horseracing. The more the Government charge, the less will be returned to horseracing. That is fundamentally at the centre of Part 1. It requires greater clarification and, I would argue, specific amendment in Committee to ensure that the fundamental principle, which I am sure the Government are willing to stick with, is not only a promise and based on trust but also on the face of the legislation.

The Minister for Sport and Tourism in another place worked hard to ensure that the Tote retained a seven-year exclusive licence for pool betting. We are grateful for that, in particular for the fact that the Government listened to the arguments in another place and have now included it on the face of the Bill. We believe that there is a strong case for the detailed consideration of the benefits or otherwise of the points also referred to by the noble Viscount, Lord Falkland; namely, the retention of an exclusive pool betting arrangement at the end of the seven-year period.

I am open to persuasion, but I calculate that the efficiency of pool betting is determined in part by the size of the pool. The more pools there are the smaller they will be and hence the less efficient each pool will he, with horseracing being the loser—particularly the smaller tracks. The potential downside of such a monopoly is kept in check by the availability of fixed-odds betting. But the Bill as it stands is committed to ending the exclusive pool betting licence in seven years' time and we believe there is a case for leaving future governments with the discretion to extend the exclusive licence should this prove to be the best thing for racing in 2011. We make no judgment as to whether the exclusive pool betting licence should be extended or whether it should remain with the Tote. However, we are saying that we should not tie our hands today to a decision which should be made in 2011.

Part 2 of the Bill covers the abolition of the Horserace Betting Levy Board with the transfer of this property primarily to the British Horseracing Board, with a few notable exceptions referred to; for instance, the National Stud which is due to become a stand-alone trust. It is important and proper that we pay tribute to the work of the Betting Levy Board under the chairmanship of Robert Hughes and in particular the dedicated work of its staff under chief executive Rodney Brack.

I agree with the Minister that in today's world, the levy is anachronistic, especially in respect of the Government's role in determining how much the bookmakers should pay to racing in the event of an impasse in the bookmakers' committee. We do, however, note that the bookmakers are keen to retain the levy and we must take note of that in our deliberations.

It is clear from discussions that the Treasury will also benefit substantially from this arrangement as well as the sale of the Tote. Can the Minister confirm that the market sale of data rights will be subject to VAT? This is likely to reduce the moneys to racing by 17.5 per cent or roughly £15 million each year. In addition, the change in the administration of the levy's capital credit grants is likely to generate an extra £10 million a year to the Treasury.

We fully support the concept of commercial arrangements as the proper means for the racing industry to sell its rights. But, as the great comedian Jack Benny once said, "Timing is everything". It is a period of great uncertainty for the racing industry, with both Office of Fair Trading and European Court decisions outstanding. These decisions could have a fundamental impact on racing, as my noble friend Lord Brooke of Sutton Mandeville mentioned.

There is particular concern that the OFT may not understand racing properly and about the interdependence of its many elements. The European Court of Justice is considering a reference by the Court of Appeal following a robust High Court judgment in support of the British Horseracing Board's database rights. Yet the judgment is not expected until autumn, so the issue may not be resolved until late this year.

These investigations are undoubtedly complex and it is unclear how they will report. What is clear is that they could have a significant impact on the amount of money that the bookmakers return to racing. Lest we forget, the levy's expenditure in support of racing was £84.6 million. This is a significant investment in racing and needs to be safeguarded.

We welcome the one-year extension to the levy until September 2006, but we are slightly concerned that it looks as though the Government are still committing themselves to the abolition of the levy before they know what will replace it. This could be a recipe for disaster and we will need to address the issue in Committee.

Among the projects the levy operates are not only the centres of support for rare breeds, about which my noble friend Lord Soulsby spoke so eloquently—and I agree with him—but also the ownership of the Horserace Forensic Laboratory; the anti-doping agency for horses. The HFL is one of the most experienced and best equipped laboratories in the field of animal drug detection in the world. The HFL provides a comprehensive drug surveillance and research service for British horseracing, as well as the equine sports, with clients around the world. Thanks to the investment of the Levy Board, we have a world-leading anti-doping agency for horses, but further progress can still be made. The horses in racing are the elite performance athletes. In the context of anti-doping measures, we should be freezing samples to enable future tests accurately to discover currently undetectable doping agents. Our interest, apart from fair competition in racing, must focus on the integrity of the breeding lines.

This Bill provides an opportunity to make sure that the transfer of the assets to the levy protects and promotes the UK's role as a leader in the fight against drugs in equine sports. Noble Lords involved in the parliamentary proceedings of the Gender Recognition Bill and the Anti-Social Behaviour Act will be aware that I strongly believe in the wider merits of an independent anti-doping agency for sport, if necessary backed by statutory powers. Best practice in anti-doping in sport requires that the anti-doping agency is independent, transparent and accountable. I stress that there is no question over the competence of the British Horseracing Board, which is due to inherit the HFL. However, when a national governing body of sport owns the anti-doping agency, there will always be a concern about potential conflicts of interest, in exactly the same way that UK Sport is in an untenable position of both funding elite athletes and running doping tests on them. I urge the Government to resolve that situation at the Sports Cabinet meeting on 20 April, when a long-overdue commitment to an independent anti-doping agency must be made.

The debate is particularly timely. In today's Daily Telegraph, Sue Mott highlights the concern that drugs may be creeping into three-day eventing. Some prominent names in the sport are worried that illegal tranquillisers are being fed to horses to calm them down for dressage events. I stress that so far there have been no positive tests, but there is now a real concern and the sport must remain vigilant.

During the passage of this Bill, we will be looking to press the Government for an independent anti-doping agency responsible for all equine sports. The role of the HFL goes further. Only this weekend, the BBC reported that UK Sport, the Government's much-conflicted anti-doping agency for sport, has agreed to start sending some of its samples to the HFL in Newmarket for analysis. It is expected that the HFL will receive clearance from the World Anti-Doping Agency in May to start testing human samples. The case for combining the work of anti-doping in equine sports and for British sportsmen and women in an overall, independent anti-doping agency is cast iron. During the passage of the Bill, we will be tabling a series of amendments to that effect, thus leading the way with the establishment of an independent anti-doping agency to include equine sports. We owe it to horseracing in particular, and sport in general, to seize this opportunity.

The final section of the Bill details the setting up of a dedicated lottery to fund the staging of the 2012 London Olympic Games. This is a piece of enabling legislation, which is dependent on London winning the right to stage the Olympic Games. Conservatives, and all parties, are strongly supportive of the London Olympic bid. I pay tribute to my noble friend Lord Coe, and the noble Lord, Lord Paul, who are both members of the board for the London bid.

While we strongly support the principle of an Olympic lottery fund, we would like to see a number of improvements made to the Bill. First, it may help to set out our general approach to the costs of staging the London Olympics. Just as the Government are committed to review the funding arrangements when we win the bid, we are also committed to reviewing the finances. In particular, we would like to see far greater emphasis on the role of the private sector. It is right that our bid should include the regeneration of the Lower Lea Valley, but the bid must not become Ken Livingstone's Lower Lea Valley regeneration bid. This is a bid to host the greatest sporting event in the world, in the greatest city in the world, while providing a much-needed fillip to British sport.

Unlike the noble Baroness, Lady Pitkeathley, we believe that there is a strong case for starting the Olympic lottery game this summer, on the back of the popular appeal of Athens 2004. The case was made superbly by my noble friend Lord Glentoran, an outstanding Olympic gold medallist, in comparison to the rather humble silver that I took. I will for ever respect everything that he says on matters regarding the Olympic Games. We also recognise that the IOC rules would prevent a lottery game being set up exclusively to fund the cost of staging the games, but it permits—and the Minister for Sport finally, not before time, recognised this point in another place—an Olympic lottery game to be held in advance of the success of our bid in July 2005. Just as the Government have been forced to admit that the IOC would permit the lottery to start early, we will show in Committee that this would actually save money for other good causes. That would be an interesting and detailed debate, and I hope to bring forward figures to satisfy the noble Lord, Lord Judd, and others who have raised the important point about the impact on other good causes. I am conscious of time, so I will move on.

The second major area where we disagree with the Government is tax. I promise to avoid political point scoring, but we believe that as much money as possible from a hypothecated Olympic lottery game should go to the Olympics. The Government are committed to the proposed lottery raising £750 million towards the Olympics, but a staggering £340 million would go to the Treasury. At the Culture, Media and Sport Select Committee inquiry into the operation of the national lottery, we were told that the Treasury is in "listening mode" about the tax take on the lottery. We intend to develop this further during the passage of the Bill.

The other major improvement that we would like to see on the Olympic lottery clauses is far greater recognition of the Paralympics. Everyone in the House will be aware of the great success of our paralympians in Sydney 2000, when we came second in the medal table. We wish them well in achieving even better results in Athens this summer. To recap on our sporting history, a British neurosurgeon, Sir Ludwig Guttman, invented the Paralympics. A sports competition for 200 World War II veterans with spinal cord injuries was held at Stoke Mandeville to coincide with the London Olympic Games in 1948. These special games went on to become the modern Paralympics. It is unfortunate that the Bill does not explicitly refer to the necessary support that we should be giving to the British Paralympic Association, and we will seek to correct that.

I pay tribute to the Department for Culture, Media and Sport for persuading the Government to find parliamentary time for this Bill. We welcome the Bill, and in principle we support all three parts. There is cross-party support for the Bill, and we look forward to working with the Government to improve the Bill for the benefit of horseracing and the wider interests of sport.

5.17 p.m.

Lord Davies of Oldham

My Lords, we have had a wide-ranging debate. I am grateful for the contributions of all noble Lords who have spoken and who have indicated that there are points that they intend to pursue in Committee, which we recognise is bound to be the case. I want to concentrate overwhelmingly on the main principles behind the Bill, as that is the basis on which it gets its Second Reading. However, I take on board the clear signals that have been sent from all parts of the House that there are issues to explore in detail in Committee. I am grateful for the widespread consensus that has developed in the House for the principles underlying the three main parts of the Bill. It is important that we make progress on the Bill as rapidly as we can.

A number of specific issues were raised, to which I need to return. First, I was glad that the debate on the Back Benches was opened by the noble Lord, Lord Wakeham, with his extensive experience of horse racing. It also gave him the chance to refer to the noble Lord, Lord Carlisle of Bucklow, who I see in his place. We recognise the issues with regard to the Tote and the situation of the racing industry, which is in a far healthier position than it would have been had appropriate action not been taken.

The purpose of this Bill is to guarantee appropriate action to safeguard the sport for the future. Horse racing ought not just to be regarded as the sport of kings, as the noble Viscount, Lord Falkland, suggested. He is, of course, right about that. All of us are able to lose money on the race track, whether we are kings or paupers. Most of us succeed in doing that and still have an enjoyable day at the races in the company of our fellow citizens.

I appreciated the points made by the noble Lord, Lord Addington, and the general welcome that he gave to the Bill. He lamented the fact that certain aspects of our supporting provision and current facilities for the Olympic hid were not totally in place. He will recall that even a country such as Australia, often set up as the absolute beacon of countries in its commitment to sport and sporting facilities, found it necessary to build extensively and specifically—and needed money to do so. If we are to make an Olympic bid and certainly—I think that this was the burden of his remarks—if we are to ensure that our young people have the opportunity to develop their talents and training prior to the Olympic competition, substantial investment is obviously necessary.

I heard what my noble friend Lord Judd said about the anxieties of the National Council for Voluntary Organisations, which was amplified by my noble friend Lady Pitkeathley, with her particular interest in lottery distribution. We should recognise that important issues are involved. My noble friend Lord Judd suggested that unclaimed prize money might provide additional funding for the Olympic Lottery Distribution Fund. We welcome the work that the NCVO is doing creatively at present on funding, with its obvious interest in safeguarding the funding that it receives from lottery sources. We will consider that proposal in further detail and decide on the extent to which it could be employed. I am grateful to my noble friend for having brought that to our attention.

As for transfer or raiding of lottery funds for the Olympics, both my noble friends are right to draw attention to the power in the Bill, but I would have to define it as a precautionary measure. We have no intention of raiding good causes to provide for the Olympic Games. That is why there is specific provision in the Bill for money from the alternate structure. However, we must bear in mind that, should we win this bid—every noble Lord who spoke expressed the hope that we be successful—we will then be committed to substantial expenditure. Especially as this is likely to be the only legislation that will underpin the Olympic Games bid—it is certainly the only Bill that will be passed in time for the long run-in to the games that is necessary—it would be remiss of us not to include a reserve power in the Bill for alternative funding. However, I think that my noble friends will recognise that we would regard the use of that power as being only for dire extremis concerning receipt of lottery funds from the Olympic Games lottery.

The noble Lord, Lord Brooke, raised a number of interesting points. In particular, he raised the issue of the role of the Delegated Powers and Regulatory Reform Committee, in which he plays a significant part. We are indeed giving careful consideration to the committee's report and will bring forward in Committee proposals to address the points it raises.

On the issue of the European Court of Justice, which the noble Lord raised—which I think brought a slight frisson and shadow to the House as we recognised the difficulties that can be caused when questions are referred there—the Court of Appeal will take into account the answers in reaching a final decision on the data rights issue. It will be for the horseracing industry to work out the implications of a decision adverse to the British Horseracing Board, but my right honourable friend the Secretary of State will take into account all relevant circumstances when exercising her powers under the Bill—for example, concerning the abolition of the levy system. So we will need to take into account any such judgment. We recognise the strength of the noble Lord's point and are grateful to him for drawing the House's attention to that important matter.

The noble Lord, Lord Soulsby, referred to the crucial role of the levy board. We recognise the validity of his points about the significance of the levy hoard in its support for rare breeds of horses. That is a crucial function; that is why it is necessary. We fully intend to take on our responsibilities to ensure that the development of proposals under the Bill fully takes into account that crucial role which the levy board has until now been performing.

Several noble Lords referred to another matter—most dramatically, my noble friend Lord Lipsey who, in suitably challenging mode, suggested that the only price that ought to be placed on the sale of the Tote was zero. That is a good bargaining start; no doubt we will have an interesting Committee debate on such a concept. It is unlikely that that proposal commands the widest assent. What has been expressed in the House is how important it is that any sale of the Tote should be fair to the horse racing industry; that we should recognise the crucial role that the Tote has played in enhancing and developing horseracing in this country; and that that should not be put in jeopardy.

However, to go into a marketplace and suggest, first, that there should be only one potential buyer and, secondly, that that buyer have the facility at nought seems an extraordinary proposal when entering any marketplace that I recognise. Perhaps my noble friend fails to recall that, in the past, governments have been used to cashing in their monopoly power and, when they have granted monopolies to others, had no hesitation in recognising that a cash value attached to the laws of the land, which had placed restrictions on people. They had enhanced the position of some people—the monopoly holders—against those of the general citizenry. It was therefore only right that monopoly holders should recognise that there was a price on the privilege accorded them.

The 16th century state would not have survived without that concept. In a sense, the Tote has an element of that theory behind it. I am merely telling my noble friend that he is not the politician I take him for if he would cast aside an important public asset without recognising its value to the wider community, as well as to the monopoly enjoyer of that right—the Tote. I thought that I might provoke my noble friend.

Lord Lipsey

My Lords, I am most grateful to my noble friend for giving way. Before he adumbrates further on the absurdity of my proposition—which, incidentally, has the support of the entire horse racing industry and, in fact, everyone who has considered the matter except the Government and the bookmakers—does he agree that the closest analogy is the sale of the Trustee Savings Bank, where the price was zero: it was rightly given to the depositors? That is the analogy that should apply in this case, not those that my noble friend suggests.

Lord Davies of Oldham

Well, my Lords, I hear what my noble friend says. I have no doubt that he will advance that position in Committee—he has already said that he will—where we can cross swords fruitfully. He will forgive me if I do not go into too much detail on the issue now.

The noble Lord, Lord Glentoran, concentrated his remarks overwhelmingly on the Olympic Games. I listened carefully to his point about the constructive role and high reputation of the Millennium 2000 body and its potential role for 2012. That is not directly within the Bill's framework but there is no reason why the Bill should not be a vehicle for such constructive thoughts. I am glad that the noble Lord took the opportunity to voice that point which the Government will take very seriously as we develop our strategy for tackling Olympic issues.

The noble Lord, Lord Moynihan, who followed the noble Viscount, Lord Falkland, raised various issues. I very much appreciated his enthusiastic commitment to horse racing of which we are all aware. I recognise the validity of the points he raised. This is an area where we need to tread very carefully. There is a fine balance to be achieved with regard to these changes. I notice that noble Lords are very much in favour of coming back to issues of primary legislation again in the future. A far-sighted administration always seeks to provide that framework in a Bill which covers all eventualities. I hope I shall be able to reassure the noble Lord that the provisions in the Bill safeguard and advance the interests of horse racing while meeting the points he raised in his speech.

The noble Lord, Lord Moynihan, produced a wide-ranging speech of very great force. Some of his points had been made by other noble Lords but several were highly specific. I should like to respond to those. He is right to raise the issue of doping. We cannot come before this House and discuss any sport without recognising this immensely significant issue—we are all mindful of recent developments in athletics. I give the noble Lord the assurance that the Government are active on this front. A committee is currently looking into this question and intends to report on doping issues in the summer.

We have to be at the forefront of dealing with this issue. I am grateful to the noble Lord for having raised it today. If doping is not stamped out in sport, then it is guaranteed utterly to devalue the Olympic ideal and ruin the Olympic Games wherever they are held. It would also destroy public regard for what sport represents. It would be a tragedy for us all. The noble Lord raised a number of other points that will be considered in Committee. I am well aware that there are several significant clauses in the Bill on which we will engage in fruitful debate.

Having spoken a little longer than I should have done, I shall conclude on this fact. This constructive Bill deals with developments in two very important aspects of our national sporting life. There are the issues relating to horse racing and all the challenges that currently face it and the importance of guaranteeing that there is a proper relationship between the betting industry and its clients. There is also a need for proper support for a sport which is enormously expensive to pursue. It may not be the sport of kings or not always the sport of billionaires but there is no doubt it is an extremely expensive sport and one which needs very considerable resources to underpin it.

The other issue of the Olympic Games is one which has produced a unanimous response in this House. The Government are grateful for that level of support. I should like to respond to the point made by my noble friend Lord Smith of Leigh. I was grateful that he had a particular locale in mind on horse racing when he talked about Wigan and the Tote. He also emphasised in this debate that the Olympic bid is not a London bid but a United Kingdom one. It is designed to produce benefits for the whole country and it will do.

If we are successful in this bid, it will stimulate sport and sporting activity among our young people and an interest in sport among others. I am grateful to my noble friend for emphasising the fact that not only does the rest of the country stand to benefit from the bid, but that it supports the bid. We have made a good start with this. There is an immense distance to go but it is important to have a structure in place to finance the bid well in advance of 2012 and as soon as we possibly can after the bid has proved a success as we all hope it will do.

Lord Judd

My Lords, before my noble friend sits down, he kindly referred to one point put forward by the National Council for Voluntary Organisations on the possible use of unclaimed prize money. That was part of a very carefully considered package of proposals to protect the interests of the voluntary sector. Can he assure the House that the Government will look at the total package and not cherry pick those which are the most amenable from the Government's point of view?

Lord Davies of Oldham

My Lords, I apologise to my noble friend if he thought that I was cherry picking. That was not my intention. I was seeking to illustrate the constructive way in which my noble friend had advanced his case without repeating his speech which I would not wish to do. Of course we recognise that there are constructive ways in which additional resources can come. However, this must not be at the expense of good causes. I am happy to give him that assurance.

I am grateful to noble Lords for their support in the debate. I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Grand Committee.